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Acid-Test Ratio is down from the previous year and is lower than the industry ATA quartiles, indicating a weakness in this financial aspect. Inventory Turnover: The Inventory Turnover ratio was 5. 2 in year 12 which is also down from 6. 1 in Year 1 1 . In order to find this ratio we took the cost of goods sold and divided it by the average inventory. This will give us indications of how well sales are doing, and whether there is excess in inventory. Comparing the Inventory Turnover to the industry data quartile, it is lower than quartile three at 13. 0, quartile two at 10. 2, and quartile one at 8. . This ratio is lower than the revises year and shows to be significantly lower than the industry data, this also demonstrates a weakness for our company. Accounts Receivable The Accounts Receivable Turnover for year 12 is 30. 4 and for year 11 is 32. 2. To calculate this ratio we took the credit sales and divided it by the average accounts receivable, which gives us an indication of the number of times we our accounts receivable balance during each period. Comparing the Accounts Receivable Turnover ratio to the industry data quartile, it is lower than quartile three at 35. 2, quartile two at 33. , and quartile one at 31. 4. The ratio has dropped from the previous year and is lower than the industry data, which demonstrates weakness. Days Sales in Receivables: The Days Sales in Receivables ratio indicates how long it takes to be paid on sales in accounts receivable. In year 12 the ratio was 12. 0, which is up from 11. 1 in year 11. TO find the days sales in receivables ratio we first found the one days sales by dividing the net credit sales by the amount of days in the term. We then divided the average net accounts receivable by the one day’s sales to find the Day’s Sales in Receivables.

Comparing the days sales in achievable ratio to the industry data quartile, it is lower than quartile three at 15. 1, and quartile two at 13. 5. It is higher than quartile one at 11. 3, and is has shown growth in the last term. Thus, we do not need to show concern for our Days Sales in Receivable ratio. Debt Ratio: The Debt ratio gives us an idea of how much debt we have in proportion to our assets. In order to calculate this ratio we divide our total debt by our total assets. Our debt ratio increased from year 11 to year 12. It went up from 28. 34% in year 11 to 29. 94% in year 12.

Comparing the debt ratio to the industry data quartile, it is lower than quartile one at 30. 0%, quartile two at 45. 0%, and quartile three at 66. 0%. Although we had an increase in our debt ratio from year 11 to year 12 it was not a huge hike. It is still lower than that of all three quartiles. This means that our company is at low risk and represents a strength for us. Times-interest-earned ratio: The Times interest earned ratio is an indicator of our ability to pay off interest charges with net operating income. In order to calculate this ratio we need to divide the income before interest and tax by the interest expense.

In year 12 it was 35. 17 which are up from 31. 12 in year 11. Comparing the times- interest-earned ratio to the industry data quartile, it is higher than quartile three at 29. 7, quartile two at 17. 2, and quartile one at 8. 1 . This in addition to the increase from year 11 to year 12 shows that we are strong in the aspect of our finances. Rate of return on Net Sales: The Rate of return on Net Sales ratio is calculated by dividing the net income by the net sales, and serves as an indicator of the company’s profitability. In year 12 we had a ratio of 6. 13% which was also up from 5. % in year 11. Comparing the Rate of return on Net Sales to the industry data quartile, it is lower quartile three at 7. 55%, similar to quartile two at 6. 12%, and higher than quartile one at 4. 20%. The increase in this ratio from the previous term indicates that we are operating more efficiently and when compared to the industry data we see that even-though our ratio is not very high there is no need for immediate concern in this area. Rate of Return on Total Assets: The Rate of Return on Total Assets ratio will give us an idea of how well the company is using its assets and is it effective.

In order to calculate this ratio we must divide the company’s earnings before interest and taxes (BIT) by our total Net Assets. In year 12 the company’s ratio was 13. 68%, which is up from 12. 30% in year 11. Comparing the rate of return on total Assets to the industry data quartile, it is lower than quartile three at 17. 20%, but higher than quartile two at 12. 30%, and quartile one at 8. 60%. Growth in this ratio is also a good indicator that the company is operating more efficiently and based on the industry data our rate of return on total assets demonstrates a financial strength.

Rate of Return on Common Stockholder’s Equity: Our Rate of Return on Common Stockholder’s Equity ratio for year 12 was 18. 46%, which is down from 20. 20% in year 11. We calculated this ratio by subtracting the preferred dividend from the net income and the dividing the result by the average common stockholders equity. This will tell us how well the company is generating income for common stockholders. Comparing the Rate of Return on Common Stockholder’s Equity to the industry data quartile, it is slightly lower than quartile three at 18. 60%, but higher than quartile two at 16. %, and quartile one at 12. 80%. Though we had a small drop in this ratio from year 11 to year 12, our company is still showing to have a strength when comparing to the industry data. Earnings per Share of Common Stock: Earnings per Share of Common Stock can be a good indicator of our company’s profitability and is used to determine the share’s price. In order to calculate this ratio we subtract the dividends on preferred stock from the net income. Then we divide the result by the average outstanding shares. In year 12 earnings per share of common stock was at $1. 03, which was up from $0. 2 in year 11. Comparing the Earnings per Share of Common Stock the industry data quartile, it is higher than quartile three at 0. 9, quartile two at 0. 87, and quartile one at 0. 83. There has been a significant increase from year 11 to year 12, and earnings per share of common stock are much higher than the industry data quartiles. This shows a financial strength for Company G. Price Earnings ratio: The Price Earnings ratio tells us how much the market is paying for our earnings. In order to calculate this ratio we need to take the market price per share and divided it by the earnings per share.

In year 12 this ratio was at $5. 58 which was up from year 11 at $5. 21. Comparing the price Earnings ratio to the industry data quartile, it is lower than quartile three at 7, and quartile two at $6. 3, but is slightly higher than quartile one at $5. 5. Price earnings ratio indicates a weakness in our finances because it is almost lower than all three quartiles even though it shows growth over last year’s ratio. Book Value per Share of Common Stock: Book Value per Share of Common Stock is calculated by taking the preferred equity and subtracting it from the total shareholder equity.

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